Lipid bilayer vesicles containing a high concentration of the fluorescent dye carboxyfluorescein are used to study mechanisms of interaction between liposomes and cells. Self-quenching largely prevents the dye from fluorescing as long as it remains trapped at high concentration in vesicles. Relief of self-quenching as the dye is released into the much larger volume of the cell is a measure of transfer of liposome contents to the cell. Transfer into the cell is distinguished from stable adsorption onto the cell surface by fluorescence microscopy, fluorometry, and flow microfluorometry. Vesicles made of fluid-phase neutral lipids, transfer their contents to cells, with no significant amount of stable adsorption to the cell surface. The transfer of contents of small unilamellar vesicles saturates as a function of vesicle concentration. A mechanism of transfer is suggested whereby the solute passes through the two closely apposed bilayer membranes of vesicle and cell.